Zero-Percent Student Loan Refinancing Act

I 117TH CONGRESS 1ST SESSION H. R. 3024 To establish a temporary program for the refinancing of certain Federal student loans, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 7, 2021 Mr. COURTNEY (for himself, Mrs. HAYES, Mr. LARSON of Connecticut, Mr. MORELLE, Ms. NORTON, Mr. PERLMUTTER, Ms. PINGREE, Mr. SIRES, Ms. STRICKLAND, and Ms. WILSON of Florida) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To establish a temporary program for the refinancing of certain Federal student loans, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Zero-Percent Student 4 Loan Refinancing Act’’. 5 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 3024 IH SEC. 2. TEMPORARY PROGRAM FOR REFINANCING STU- 1 DENT LOANS. 2 (a) PROGRAM AUTHORITY.—Section 451(a) of the 3 Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 4 amended— 5 (1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 6 and 7 (2) by inserting ‘‘; and (3) to make loans under 8 section 460A’’ after ‘‘section 459A’’. 9 (b) REFINANCING PROGRAM.—Part D of title IV of 10 the Higher Education Act of 1965 (20 U.S.C. 1087a et 11 seq.) is amended by adding at the end the following: 12 ‘‘SEC. 460A. TEMPORARY PROGRAM FOR THE REFINANCING 13 OF FEDERAL DIRECT LOANS AND OTHER 14 FEDERAL STUDENT LOANS. 15 ‘‘(a) DEFINITIONS.—In this section: 16 ‘‘(1) COVERED NON-PART D LOAN.—The term 17 ‘covered non-part D loan’ means a loan— 18 ‘‘(A) made, insured, or guaranteed under 19 part B and for which the first disbursement 20 was made, or the application for the consolida- 21 tion loan was received, before July 1, 2010; 22 ‘‘(B) made under part E; or 23 ‘‘(C) made under— 24 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 3024 IH ‘‘(i) subpart II of part A of title VII 1 of the Public Health Service Act (42 2 U.S.C. 292q et seq.); or 3 ‘‘(ii) part E of title VIII of the Public 4 Health Service Act (42 U.S.C. 297a et 5 seq.). 6 ‘‘(2) COVERED PERIOD.—The term ‘covered pe- 7 riod’ means the period beginning on August 1, 2021, 8 and ending at the close of December 31, 2024. 9 ‘‘(3) ORIGINAL LOAN.—The term ‘original 10 loan’, used with respect to a refinanced loan issued 11 under this section, means a loan for which a bor- 12 rower’s liability is discharged by such refinanced 13 loan. 14 ‘‘(4) QUALIFIED BORROWER.—The term ‘quali- 15 fied borrower’ means a borrower of a loan under this 16 part, or a covered non-part D loan, for which the 17 first disbursement was made, or the application for 18 a consolidation loan was received, before January 1, 19 2025. 20 ‘‘(b) IN GENERAL.—Beginning on August 1, 2021, 21 the Secretary shall carry out a program under which the 22 Secretary makes interest-free refinancing loans to quali- 23 fied borrowers in accordance with this section. 24 ‘‘(c) REFINANCING DIRECT LOANS.— 25 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 3024 IH ‘‘(1) FEDERAL DIRECT LOANS.— 1 ‘‘(A) IN GENERAL.—Beginning on August 2 1, 2021, the Secretary shall cancel the obliga- 3 tion of a qualified borrower to repay a Federal 4 Direct Stafford Loan, a Federal Direct Unsub- 5 sidized Stafford Loan, a Federal Direct PLUS 6 Loan, or a Federal Direct Consolidation Loan 7 for which the first disbursement was made, or 8 the application for the consolidation loan was 9 received, before January 1, 2025, and issue to 10 such borrower in accordance with this section a 11 refinanced Federal Direct Stafford Loan, a refi- 12 nanced Federal Direct Unsubsidized Stafford 13 Loan, a refinanced Federal Direct PLUS Loan, 14 or a refinanced Federal Direct Consolidation 15 Loan, respectively, in an amount equal to the 16 sum of the unpaid principal, accrued unpaid in- 17 terest, and late charges of the original loan. 18 ‘‘(B) INFORMATION.—The Secretary shall 19 notify each qualified borrower of a loan refi- 20 nanced under subparagraph (A) regarding the 21 refinancing and the benefits the refinancing 22 provides to the qualified borrower. 23 ‘‘(2) REFINANCING COVERED NON-PART D 24 LOANS AS REFINANCED FEDERAL DIRECT LOANS.— 25 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 3024 IH Upon application of a qualified borrower of any cov- 1 ered non-part D loan, the Secretary shall make a 2 loan under this part, in an amount equal to the sum 3 of the unpaid principal, accrued unpaid interest, and 4 late charges of the original loan to the borrower in 5 accordance with the following: 6 ‘‘(A) The Secretary shall pay the proceeds 7 of such loan to the holder of the covered non- 8 part D loan, in order to discharge the borrower 9 from any remaining obligation with respect to 10 the original loan. 11 ‘‘(B) Any Federal student loan made 12 under this section the proceeds of which are 13 used to discharge a loan that was made, in- 14 sured, or guaranteed— 15 ‘‘(i) under section 428 shall be a Fed- 16 eral Direct Stafford Loan; 17 ‘‘(ii) under section 428B shall be a 18 Federal Direct PLUS Loan; 19 ‘‘(iii) under section 428H shall be a 20 Federal Direct Unsubsidized Stafford 21 Loan; and 22 ‘‘(iv) under section 428C shall be a 23 Federal Direct Consolidation Loan. 24 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 3024 IH ‘‘(C) Any Federal student loan made under 1 this section the proceeds of which are used to 2 discharge a loan described subparagraph (B) or 3 (C) of subsection (a)(1) shall be a Federal Di- 4 rect Consolidation Loan. 5 ‘‘(3) APPLICATION DEADLINE.—To be eligible 6 to receive a refinancing loan under paragraph (2) a 7 qualified borrower shall submit an application to the 8 Secretary during the covered period. A borrower who 9 submits an application after the expiration of the 10 covered period shall not eligible to receive a refi- 11 nancing loan under such paragraph. 12 ‘‘(d) TERMS AND CONDITIONS OF LOANS.— 13 ‘‘(1) IN GENERAL.—A loan made under this 14 section shall have the same terms and conditions as 15 the original loan, except as otherwise provided in 16 this section. 17 ‘‘(2) INTEREST RATES.—No interest shall ac- 18 crue on a loan that is made under this section. 19 ‘‘(3) NO AUTOMATIC EXTENSION OF REPAY- 20 MENT PERIOD.—A loan made under this section 21 shall not result in the extension of the duration of 22 the repayment period of the loan, and the borrower 23 shall retain the same repayment term that was in ef- 24 fect on the original loan. Nothing in this paragraph 25 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 3024 IH shall be construed to prevent a borrower from elect- 1 ing a different repayment plan at any time in ac- 2 cordance with section 455(d)(3). 3 ‘‘(4) SPECIAL RULE FOR REFINANCED PERKINS 4 AND HEALTH LOANS.—Notwithstanding paragraph 5 (1), in the case of a loan that is made under this 6 section as a Federal Direct Consolidation Loan the 7 proceeds of which are used to discharge a loan de- 8 scribed in subparagraph (B) or (C) of subsection 9 (a)(1)— 10 ‘‘(A) the refinanced Federal Direct Con- 11 solidation Loan shall have the same terms and 12 conditions as a Federal Direct Consolidation 13 Loan, except as otherwise provided in this sec- 14 tion; and 15 ‘‘(B) the Secretary may adjust such terms 16 and conditions as necessary to enable the bor- 17 rower to access loan forgiveness or other bene- 18 fits available to the borrower under the loan be- 19 fore refinancing under this section, in any case 20 where such benefits are more generous than 21 provided under a Federal Direct Consolidation 22 Loan. 23 ‘‘(5) RULE OF CONSTRUCTION.—Nothing in 24 this section shall be construed to prevent a borrower 25 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 3024 IH of a Federal student loan described in subparagraph 1 (B) or (C) of subsection (a)(1) from consolidating 2 such loans with other loans eligible for consolidation 3 under this section, or to require such a borrower to 4 consolidate such loans with other Federal student 5 loans into a single consolidation loan under this sec- 6 tion. 7 ‘‘(e) NOTIFICATION TO BORROWERS.—The Sec- 8 retary, in coordination with the Director of the Bureau 9 of Consumer Financial Protection, shall undertake a cam- 10 paign to alert borrowers of covered non-part D loans that 11 are eligible for refinancing under this section that the bor- 12 rowers are eligible to apply for such refinancing. The cam- 13 paign shall include the following activities: 14 ‘‘(1) Developing consumer information mate- 15 rials about the availability of Federal student loan 16 refinancing. 17 ‘‘(2) Requiring servicers of loans under part B 18 to provide such consumer information to borrowers 19 in a manner determined appropriate by the Sec- 20 retary, in consultation with the Director of the Bu- 21 reau of Consumer Financial Protection.’’. 22 (c) INCOME-CONTINGENT REPAYMENT.—Section 23 455(e) of the Higher Education Act of 1965 (20 U.S.C. 24 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 3024 IH 1087e(e)) is amended by adding at the end the following 1 new paragraph: 2 ‘‘(9) SPECIAL RULE FOR REFINANCED 3 LOANS.—For purposes of paragraph (7), the period 4 of time during which a borrower of a loan that is re- 5 financed under section 460A has made monthly pay- 6 ments shall be calculated in the manner described in 7 section 493C(f) for the applicable type of loan.’’. 8 (d) INCOME-BASED REPAYMENT.—Section 493C of 9 the Higher Education Act of 1965 (20 U.S.C. 1098e) is 10 amended by adding at the end the following: 11 ‘‘(f) SPECIAL RULE FOR REFINANCED LOANS.— 12 ‘‘(1) REFINANCED FEDERAL DIRECT, FFEL, 13 AND PLUS LOANS.—In calculating the period of time 14 during which a borrower of a loan (with the excep- 15 tion of a Federal Direct Consolidation Loan) that is 16 refinanced under section 460A has made monthly 17 payments for purposes of subsection (b)(7), the Sec- 18 retary shall deem the period to include all monthly 19 payments made for the original loan, and all month- 20 ly payments made for the refinanced loan, that oth- 21 erwise meet the requirements of this section. 22 ‘‘(2) REFINANCED FEDERAL DIRECT CONSOLI- 23 DATION LOANS.—In calculating the period of time 24 during which a borrower of a Federal Direct Con- 25 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 3024 IH solidation Loan that is refinanced under section 1 460A has made monthly payments for the purposes 2 of subsection (b)(7), the Secretary shall— 3 ‘‘(A) review the borrower’s payment his- 4 tory to identify each component loan of such 5 Federal Direct Consolidation Loan; 6 ‘‘(B) for each such component loan— 7 ‘‘(i) calculate the weighted factor of 8 the component loan, which shall be the fac- 9 tor that represents the portion of such 10 Federal Direct Consolidation Loan that is 11 attributable to such component loan; and 12 ‘‘(ii) determine the number of quali- 13 fying monthly payments made on such 14 component loan before consolidation; 15 ‘‘(C) calculate the number of qualifying 16 monthly payments determined under subpara- 17 graph (B)(ii) with respect to a component loan 18 that shall be deemed as qualifying monthly pay- 19 ments made on the Federal Direct Consolida- 20 tion Loan by multiplying— 21 ‘‘(i) the weighted factor of such com- 22 ponent loan as determined under subpara- 23 graph (B)(i); by 24 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 3024 IH ‘‘(ii) the number of qualifying monthly 1 payments made on such component loan as 2 determined under subparagraph (B)(ii); 3 and 4 ‘‘(D) calculate and inform the borrower of 5 the total number of qualifying monthly pay- 6 ments with respect to the component loans of 7 the Federal Direct Consolidation Loan that 8 shall be deemed as qualifying monthly payments 9 made on the refinanced Federal Consolidation 10 Loan, by— 11 ‘‘(i) adding together the result of each 12 calculation made under subparagraph (C) 13 with respect to each such component loan; 14 and 15 ‘‘(ii) rounding the number determined 16 under clause (i) to the nearest whole num- 17 ber. 18 ‘‘(3) COMPONENT LOAN DEFINED.—In this 19 subsection, the term ‘component loan’, used with re- 20 spect to a Federal Direct Consolidation Loan, means 21 a loan for which the liability was discharged by the 22 proceeds of such Federal Direct Consolidation 23 Loan.’’. 24 VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 3024 IH (e) CONFORMING AMENDMENTS.—The Higher Edu- 1 cation Act of 1965 (20 U.S.C. 1001 et seq.) is amended— 2 (1) in section 428C(a)(3)(B)(i)(V) (20 U.S.C. 3 1078–3(3)(B)(i)(V))— 4 (A) by striking ‘‘or’’ at the end of item 5 (bb); 6 (B) by striking the period at the end of 7 item (cc) and inserting ‘‘; or’’; and 8 (C) by adding at the end the following: 9 ‘‘(dd) for the purpose of ob- 10 taining a refinancing loan under 11 section 460A.’’; and 12 (2) in section 455 (20 U.S.C. 1087e)— 13 (A) in subsection (b), by striking ‘‘(b) IN- 14 TEREST RATE.—’’ and inserting the following: 15 ‘‘(b) INTEREST RATE.—Except as otherwise provided 16 in sections 460A, the terms and conditions of interest for 17 loans made under this part are as follows:’’. 18 Æ VerDate Sep 11 2014 02:21 Jun 19, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H3024.IH H3024 pbinns on DSKJLVW7X2PROD with BILLS